The different negotiation styles between U.S. and Sweden - Research Paper Example

The different negotiation styles between U.S. and Sweden Table of Contents Introduction 2 Literature Review 2 Findings and Conclusion 5 References 6 Introduction In the ever increasing highly-competitive global business environment, cross cultural negotiations have become an important area of research and study. The negotiation style may vary based on personality, personal abilities of individual negotiators, and political, emotional, cultural and physical factors of negotiation place (McDonald, 2001). Comparing negotiation behaviors across culture is significant because negotiation styles are considered very significant in international problem solving (Pierannunzi). By taking the cultural variables into account in cross cultural negotiations, international businesses can achieve success. Therefore, this research essay aims to highlight different negotiation styles between U.S. and Sweden Negotiations. It has been tried to figure out how business environment in the two economies differ and what are the tactics and strategies that are used by negotiators. Literature Review The business environment in Sweden and U.S. is completely different as analyzed from PEST analysis. According to AMB Country Report (2010), Sweden has very low economic risk, political risk and financial risk. Political conditions in Sweden are very stable for doing business. For example, although Sweden is a member of European Union however, it has not joined European Exchange Rate Mechanism because political parties argue that Euro cannot be adopted without public referendum (AMB Country Risk Report, 2010). With a population of 9 million in 2010, annual GDP growth rate of 4.5 percent in 2010, inflation rate of 1.4 percent and abundant of natural resources of forests, timber, arsenic, copper, gold, silver, zinc, tungsten, hydroelectric power, iron, uranium, feldspar and arsenic, Sweden offers ideal economic conditions to conduct business (Bureau of European and Eurasian Affairs, 2010). Swedish people have direct communication style; however, they are usually quite, reserve and shy. Moreover, they prefer working in flat hierarchical organizational structures with informal working conditions and authority at all hierarchical levels (Communicaid, 2009). Technological developments and innovation in Sweden provide a highly competent business environment. According to Global Information Technology Report 2009-2010, Sweden is the highest scorer in Information and Communication Technology (Hennigan, 2010). Companies operating in U.S. are more exposed to political risks because of high government interference. Early U.S. leaders believed in Laissez-faire concept which opposes government interference except to sustain law and order and the new leads are seeking to develop close ties between business and government (U.S. Department of State). U.S. is a developed state with 9.65 million population in 2010, GDP growth of 3.5 percent in 2009 and highly developed manufacturing and service sector (U.S. Department of State, 2010). People in U.S. are very excited and adventurous towards their tasks and they prefer working individually rather than teams (LMSCO, 2004). Technological conditions in U.S. are very favorable for businesses and it is evident from the fact that U.S. has been rated on number 2 in the last of top ten innovation driven economies (Virki, 2010). Negotiation styles vary based on culture. According to Hofstede, negotiators in the national cultures with high power distance are more comfortable with hierarchical structures, transparent authority figures and in an environment where the right to use power with discretion is preferred. On the other hand, negotiators in the national cultures with low power distance are more comfortable with flat hierarchies and democratic structures, shared authority and in the environment where the right to use power is limited to certain circumstances (LeBaron). The negotiation styles of U.S. and Swedish negotiators vary because American negotiators are aggressive, strong and have a formal attitude whereas, Swedish negotiators are more courteous and determined (Suvanto). Swedish negotiators have a greater need to save face whereas; U.S. negotiators have a far less need to save face during negotiations (Botha, 2000). The major negotiation traits and strategies which Americans usually exhibit is the cooperative nature during negotiation, flexibility even with high decision power and fair play and honesty (McDonald, 2001). When the proposal of requisitioning all Swedish tonnage in Western port was developed and the approval was sent to Berlin for Germany’s approval, then it was expected that Swedish would not take actions without Germany’s approval. However, American Ambassador had the opinion that Swedish people can be dealt at conference table because of their cooperative and accommodative style (Koblik, 2008). On the other hand, because of low context cultures, both U.S. and Sweden also shares some common negotiation styles such as giving significant focus on precise use of language to resolve the conflict (Rogan, Hammer, & Zandt, 1997). Silkenat (2009) has compared the negotiation styles of United States and Swedish negotiators. He has found that Americans are more aggressive and Swedish are less agessive. U.S negotiators use negotiation strength to their full whereas, Swedish do not utilize negotiating strengths in full. Moreover, U.S. lawyers are more influential on business-related as well as law points whereas, executives in Sweden take decisions based on law-related matters and lawyers do not have strong influence (Silkenat, 2009). A recent case of Julain Assange, the founder of WikiLeaks can be explained in this context. A recent report of Berlin highlights that Swedish authorities are secretly planning to transfer Assange who has been accused for sex offenses, to the United States as a result of negotiations between U.S. and Sweden. However, Assange spoke to his lawyer that he does not believe in fair trial in Sweden (The Swedish Wire, 2011). In my opinion, the lack of strong influence of lawyers in Sweden is being considered as a major factor contributing to such disputes. Another recent example of climate negotiations between U.S. and Sweden highlight the negotiating styles of Swedish people. Sweden has planned to launch a “Forerunners Climate Coalition” which will help the country to achieve ambitious climate goals. Through this program, Sweden aims to involve less developed economies so that climate aid of 30 billion dollars would be used effectively and the pressure on the United States would be also increased through a legally binding global climate agreement (Nyheter, 2010). Swedish tactics are considered more suitable for international negotiators because they are more accommodative, friendly and fair (Suvanto). On the other hand, American negotiation traits like being impatient because of aggressive negotiations, being arrogant most of the times, lacking listening skills and having naïve attitude (Jackson, 2006). Fisher argues that U.S. people are generally perceived as manipulative at the bargaining table because during negotiations they consider themselves as multi-lateral negotiators, models of modernity and technological success and self-righteous. For example, American government negotiators are the representatives of U.S. based multinational companies and they have leadership role in their head and consider U.S. objectives as concurring with the large world community. In this way when U.S. negotiators expect some degree of deference at the negotiation table, they are perceived as manipulative because of their negotiation styles (Sunshine, 1990). Findings and Conclusion The environment analysis of Sweden shows that the economy of Sweden is a developed economy which offers huge opportunities to businesses through economic growth, stable government and resources. The U.S. economy is also a developed economy however government, as compared to Sweden, is more strict and strong. Moreover, cultural differences between the two economies are the major factors contributing to different business environment. The analysis of negotiation styles of Swedish and U.S. negotiators show that Americans are more aggressive, formal, strong and risk-takers whereas, Swedish are very cooperative, shy, informal and courteous people. American negotiators understand the negotiating skills of Swedish people therefore; Americans have always been trying to negotiate the matters at the bargaining table with Swedish people, as evident from the example of reacquisition Swedish ships. On the other hand, Swedish negotiators have been more involved in informal ways to achieve the solutions as evident from the example of climate negotiations. However, because of cooperative nature of Swedish people and strong influence of U.S. negotiators, the U.S. and Sweden negotiations, both at small or big level, have been successful. However, Swedish negotiators styles appear to be more suitable in consideration to the current business environment as compared to the U.S. negotiation styles. References U.S. Department of State. (n.d.). Government Involvement in the American Economy. Retrieved January 28, 2011, from http://economics.about.com/od/useconomichistory/a/government_inv.htm AMB Country Risk Report. (2010, October 29). Sweden. Retrieved January 28, 2011, from http://www3.ambest.com/ratings/cr/reports/Sweden.pdf Botha, H. (2000). How to Negotiate with Other Nations and Cultures. Retrieved January 28, 2010, from http://www.henkbotha.com/inter1.htm Bureau of European and Eurasian Affairs. (2010, November 8). Background Note: Sweden. Retrieved January 28, 2011, from http://www.state.gov/r/pa/ei/bgn/2880.htm Communicaid. (2009). Doing Business in Sweden | Swedish Social and Business Culture. Retrieved January 28, 2011, from http://www.communicaid.com/access/pdf/library/culture/doing-business-in/Doing%20Business%20in%20Sweden.pdf Hennigan, M. (2010, March 26). Sweden tops rankings of global technology report for first time; Ireland remains at 24th rank behind Belgium and United Arab Emirates. Retrieved January 28, 2011, from http://www.finfacts.ie/irishfinancenews/article_1019333.shtml Jackson, J. B. (2006, October 28). US Negotiation Style. Retrieved January 29, 2011, from http://www.firstbestordifferent.com/blog/?p=25 Koblik, S. (2008). Failure and Success: The Trade Negotiations Between the Sweden and the Western Powers, 1916 to 1918. Retrieved January 29, 2011, from http://www.sciecom.org/ojs/index.php/scandia/article/viewFile/858/643 LeBaron, M. (n.d.). Culture-Based Negotiation Styles. Retrieved January 28, 2011, from http://www.gevim.co.il/image/users/89301/ftp/my_files/Culture-Based%20Negotiation%20Styles.pdf LMSCO. (2004). The U.S. Business Environment. Retrieved January 28, 2011, from http://www.lmsco.com/US%20Business%20Environment.pdf McDonald, J. W. (2001). U.S. Negotiation Style. Retrieved January 29, 2010, from http://www.unc.edu/depts/diplomat/archives_roll/2001_03-06/mcdonald_negot/mcdonald_negot.html Nyheter, D. (2010, July 28). How Sweden will push the US and China on climate change. Retrieved January 29, 2011, from http://www.sweden.gov.se/sb/d/12047/a/150068 Pierannunzi, M. (n.d.). American Negotiating Behavior: Questions and Answers. Retrieved January 29, 2011, from http://www.usip.org/american-negotiating-behavior/american-negotiating-behavior-questions-and-answers Rogan, R. G., Hammer, M. R., & Zandt, C. R. (1997). Dynamic processes of crisis negotiation: theory, research, and practice. US: ABC-CLIO. Silkenat, J. R. (2009). The ABA guide to international business negotiations: a comparison of cross-cultural issues and successful approaches, Edition 3. American Bar Association. Sunshine, R. B. (1990). Negotiating for international development: a practitioner's handbook, International Development Law Institute. Netherlands: Martinus Nijhoff Publishers. Suvanto, S. (n.d.). Negotiating International Business Transactions: A Scandinavian Approach. Retrieved January 29, 2011, from http://www.dundee.ac.uk/cepmlp/car/html/car7_article19.pdf The Swedish Wire. (2011, January 12). Sweden aims to extradite Assange to US. Retrieved January 29, 2011, from http://www.swedishwire.com/politics/8047-sweden-aims-to-extradite-assange-to-us U.S. Department of State. (2010, June 7). Background Note: Dominican Republic. Retrieved January 28, 2011, from http://www.state.gov/r/pa/ei/bgn/35639.htm Virki, T. (2010, February 11). Sweden beats U.S. to top tech usage ranking. Retrieved January 28, 2011, from Reuters: http://www.reuters.com/article/2010/02/11/us-countries-ranking-idUSTRE61A13F20100211 Read More